Dhanalaxmi CEO PG Jayakumar under fire for not disclosing RBI rap

PG Jayakumar, the MD and CEO of Dhanlaxmi Bank, has incurred the wrath of some of his board members for failing disclose the Reserve Bank of India's strictures against the bank's promoters, and for defending their alleged breach of regulations with the central bank.

In a letter dated May 14, the RBI had expressed concern that the bank's promoters, including Raja Rao, Shital Raghu Kataria and other companies may be holding more than 5% of the bank but under different names. It asked for comments from the bank so that the issue can be examined.

"Jayakumar was pulled up by the board of directors in a meeting held in early August for not informing them about the communication from Reserve Bank of India. It was the auditors who presented the letter to the board. Despite this he has replied to the letter without informing the board again,'' said a senior bank official in the know of the development.

Mr Jayakumar is also believed to have given a clean chit to the shareholders saying that there is no connection, the person added. The board members are also believed to be unhappy with the auditors who complained of non-transparency and later quit. I am not going to comment on this. It is an administrative matter and matters discussed in the board cannot be discussed in public,'' Mr Jayakumar told ET.

I am very much in the grind and will continue to be in the grind. This (resigning) thought has not crossed my mind,'' Jayakumar said. Shailesh Haribhakti, well-known chartered accountant and board member, declined to comment on the matter. GN Bajpai, former chairman of Securities and Exchange Board of India, and chairman of Dhanlaxmi Bank, did not respond to calls. The bank will hold its annual general meeting on September 28 and appoint new auditors.

The central bank inspectors have also asked the bank for details on the shareholding and ownership pattern. The private sector bank has been under the regulatory glare ever since the exit of a chief executive over board room disputes some time last year.



Source: EconomicTimes

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Punjab National Bank forwards Ind-Swift case for debt recast

Ind-Swift Ltd, a Chandigarh-based mid-sized pharmaceutical company, has been referred to the corporate debt restructuring (CDR) cell by Punjab National Bank to sort out loans aggregating about Rs 900 crore.

Nine banks, including PNB (Rs 405 crore), State Bank of Patiala (Rs 131 crore), State Bank of India (Rs 80 crore), Bank of India (Rs 64 crore) and Canara Bank (Rs 57 crore), and a financial institution collective have an exposure of Rs 843 crore to the company.

The abovementioned banks and the financial institution (Export-Import Bank of India) are CDR members. Non-CDR members – Catholic Syrian Bank, IFCI and Tata Capital – collectively have an exposure of about Rs 57 crore to the pharma company, , said an official with one of the banks involved in the debt resolution exercise.

According to Ind-Swift, it has made a reference to the CDR cell through PNB in view of shrinking operating margins, high level of finished stocks, low liquidity, and escalating debt costs.

The CDR mechanism came into existence in 2001 to restructure debts of viable corporate entities affected by internal and external factors. A cell floated by banks and financial institutions screens and implements all corporate loan restructuring proposals.

Competitiveness of the company has been impacted due to mushroom growth of small units.

The reasons why the company is facing rough weather are manifold. Over the years, tax exemptions and subsidies given by the State governments of Himachal Pradesh, Uttarakhand and Jammu & Kashmir led to more than 400 small and mid-sized pharma units manufacturing generic drugs being set up.

These pharma units were initially set up as contract manufacturers for bigger pharma companies. But once orders started drying up they ventured on their own to manufacture and market-generic drugs (which are copies of branded drugs whose patent has expired). They began selling products by cutting their profit margin, which in turn put stress on Ind-Swift’s margins.

In the last two years, Ind-Swift could not pass on the increase in raw material costs to the overseas customers due to the fixed nature of contracts. Further, substantial amount of cash accruals of the company had to be utilised for servicing debt obligations.

Due to fire at its Parwanoo unit (in Himachal Pradesh) in October 2009, Ind-Swift made a claim of Rs 8.10 crore on an insurance company. However, the insurance company settled only Rs 1.35 crore of the claim. This added to the liquidity crunch.

Changing tack

The company, which is listed on the BSE as well as the NSE, has shifted its marketing operations from Chandigarh to Mumbai and doubled the marketing force from 900 to 1800. But this move added to the administrative cost.

Ind-Swift has taken steps to strengthen its operational management by appointing industry veterans to head marketing, operations and technical marketing functions.

The pharma company intends reducing its dependence on low yielding generic products and trading activities and step up its focus on ethical prescription (drugs which is available only with written instructions from a doctor) business.

According to the company, the positive outcome of the steps already taken to turn the corner will take two years to fructify.

Recast

According to the the terms of the debt recast, term loans aggregating Rs 163 crore and corporate loans aggregating Rs 102 crore will be repaid over eight years at a floating interest rate of 12 per cent. Interest due on terms loans will be converted into funded interest term loans at 10.50 per cent interest. Letters of credit thatdevolved up to June 30 will be converted into working capital loan.

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Special SBT offer on retail loans, deposits

State Bank of Travancore (SBT) has announced “Aishwaryotsav,” a festival offer of reduction of 0.50 per cent in interest rates for housing and car loans up to September 30.

The margin for the loan also has been reduced by five per cent, a bank spokesman said here. Processing fee for the loans will be waived during this campaign period. The bank offers car loans up to a maximum of Rs 30 lakh and home loans up to Rs 3 crore.

SBT has also announced a festival special term deposit scheme for Onam and the 67th year of existence of the bank.

The offer is open for NRE as well as domestic customers at 9.50 per cent for a period of 670 days. The offer will be valid till September 15, 2012.

Details can be had from the Web site www.statebankoftravancore.com or on toll-free number 1800 425 5566.

vinson.kurian@thehindu.co.in

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SBI plans to keep branches open on Sundays to help improve biz

State Bank of India may have its branches open on Sundays to help improve efficiency, a top bank official has said.

“Possibly we would like to see Sunday working which would increase the time available for doing banking and increase the business,” Bank Chairman Pratip Chaudhuri told analysts on a conference call organised by the brokerage Edelweiss Securities.

The bank had last year taken everybody by surprise by opting to keep all its branches open on October 2 to compensate for a day’s business loss due to a technical snag.

The bank management was happy with the foot falls and the staff turnout at the branches at that time in spite of it being a Sunday as well as a national holiday — Gandhi Jayanti.

Notably, many private banks, which control only a minority share in the banking operations, keep their select branches open on Sundays for customer convenience, even though technologies such as like Internet banking have reduced the need.

Being open on Sundays is said to help the branches attract the new-age working class customers where both the spouses in a household work and struggle to do banking transactions during the week.

SBI, which has almost 14,000 branches across the country, counts on its large chunk of savings account deposits (at over 38 per cent) for higher margins.

However, if such a move were to be made, it would be interesting how the bank unions, which had crippled banking operations across the country last week protesting reform measures, take to such a proposal.

SBI had carried out widely appreciated ‘Parivartan’ programme in the early part of this decade, which helped it stay relevant in changing times and maintaining lead in the market.

During the call, Chaudhuri said the costs incurred on developing physical infrastructure and network does not hit the bank as much as staff costs.

In order to improve efficiency, it will therefore try to delegate routine responsibilities currently done by officers to the low cost junior employees, he said.

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ICICI Bank pays Rs 53 lakh in gold coin duty evasion case

ICICI Bank has paid Rs 53 lakh in a duty evasion case relating to manufacture and sale of gold coins.

“ICICI Bank being the brand owner has admitted the facts and implication (in the duty evasion case) and paid an amount of Rs 53.08 lakh towards their duty liability including interest of Rs 7.29 lakh,” Central Excise Commissionerate (Kolkata) said in a statement.

The duty evasion on manufacture and sale of gold coins by the ICICI Bank was discovered by the Anti-Evasion Unit of the Kolkata Commissionerate, it added.

Although the ICICI Bank has admitted the facts and paid Rs 53 lakhs, it said, “further investigation is in progress“.

During inquiry, the statement added, it was “revealed that ICICI Bank has manufactured branded gold coins through job-worker for their corporate customers and sold/redeemed through their branches located throughout India during March 1, 2011 to March 16, 2012 without payment of duty...and thereby evaded central excise duty to the tune of Rs 45.79 lakh”.

The duty was imposed under Rule 12AA of the Central Excise Rules, 2002 which deals with registration, maintenance of accounts, payment of duty etc. with regard to manufacture of jewellery on job work basis.

Job-worker has been defined as a person engaged in manufacture or processing of article of jewellery on behalf and under the instructions of the brand owner.

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